BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 565
SENATOR TOM TORLAKSON, CHAIRMAN AUTHOR: MIGDEN
VERSION: 4/26/05
Analysis by: Jennifer Gress FISCAL: No
SUBJECT:
CalHome Program
DESCRIPTION:
This bill would remove the reference to existing programs in the
CalHome intent language to allow the Department of Housing and
Community Development to provide CalHome grants to public
agencies and nonprofit developers who may not have an existing
homeownership program, but have nevertheless demonstrated the
capacity to operate one.
ANALYSIS:
The CalHome program is administered by the Department of Housing
and Community Development (HCD) and provides grants and loans to
public agencies and nonprofit corporations for projects or
programs that enable low and very low-income to become or remain
homeowners. Grants may be used to fund the following
activities:
First-time homebuyer down payment assistance
Home rehabilitation
Acquisition and rehabilitation
Homebuyer counseling
Self-help mortgage assistance
Technical assistance for self-help homeownership
HCD may also make loans to public agencies or nonprofit
developers for the following activities:
Purchase of real property
Site development
Predevelopment
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Construction expenses of homeownership development
projects
Permanent financing for mutual housing and cooperative
developments
The CalHome statute provides that to be eligible to receive a
grant or a loan, public agencies or nonprofit corporations must
demonstrate sufficient organizational stability and capacity to
carry out the activity for which they are requesting funds,
including the capacity to manage a portfolio of individual loans
over an extended period of time. The statute further allows
that capacity may be demonstrated by substantial successful
experience performing similar activities, or through other means
acceptable to HCD.
Language in the intent section of the statute states, "The
purpose of the CalHome Program established by this chapter is to
support existing homeownership programs?" Because of the
reference to "existing programs," HCD has written its
regulations to preclude applicants from applying for funds
unless they currently offer the same or a substantially similar
program, or have offered one for at least two of the previous
four years. Further, the regulations do not provide an
opportunity for the applicant to demonstrate capacity through
other means.
This bill would remove the reference to "existing programs" in
the CalHome intent language.
COMMENTS:
1.Purpose of the bill . By removing the reference to "existing
programs," the author intends to ensure that applicants can
apply to fund new programs, as well as existing programs, as
long as they can demonstrate the capacity to operate the
program through some other means.
2.Case in point . In 2000, the City of Garden Grove wanted to
reinstate its home rehabilitation program with CalHome funds.
At the time, the city administered a first-time homebuyer
program, but hadn't offered a rehabilitation program in five
years. Although the city had expertise in administering loan
programs, including the previous home rehabilitation program
from which it was still servicing its loans, it failed to meet
the requirement that the city must have offered the program in
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two of the past four years. The City of Garden Grove was
therefore ineligible to receive CalHome funds to reinstate its
rehabilitation program. Ironically, the city could have
applied for additional first-time homebuyer funds, which it
didn't need, but could not apply for rehabilitation funds,
which it did need.
3.Equity . With the "existing program" requirement in current
law, communities that already have homeownership programs
receive additional funds while communities that may have
greater housing needs but no programs receive nothing. The
need for homeownership assistance exists statewide, and there
are many agencies and organizations capable of administering
such programs.
4.Expand number of eligible programs . By allowing funds for
both new and existing programs, SB 565 would expand the number
of programs eligible to receive CalHome grants.
POSITIONS: (Communicated to the Committee before noon on
Wednesday, April 27.)
SUPPORT: None received.
OPPOSED: None received.